Bridges Corporation
Bridges Corporation Manufactures and Sells Two Products: a and B

Bridges Corporation
Bridges Corporation manufactures and sells two products: A and B.
B.The projected information on these two products for the coming year is presented below:
                                           $\text {\underline{ Product A} }$   $\text {\underline{ Product B} }$
$\begin{array}{lcc}\text { Sales in units } & 4,000 & 1,000 \\\text { Sales price per unit } & \$ 12 & \$ 8 \\\text { Variable costsper unit } & 8 & 4\end{array}$

Total fixed costs for the company are projected at $10,000.
Refer to Bridges Corporation.How many units would the company need to sell to produce an income before income taxes equal to 15 percent of sales?
Again,using a unit of sales mix as the unit of analysis,one unit of sales mix sells for $56.Since the contribution margin is $20 on one unit of sales mix,the CM ratio on one unit of sales mix is $20/$56 = .3571.This implies that variable costs as a percentage of sales are equal to 1 - .3571 = .6429.Income before income taxes equal to 15 percent of sales can be found by solving a formula of the following type:
Sales - VC - FC = Income before income taxes
In this particular case,we solve the following formula:
Sales - (.6429 ´ Sales)- $10,000 = (.15 ´ Sales)
Solving for Sales,we get $48,286.We can find out how many units of sales mix are required to generate sales of $48,286 by dividing $48,286 by $56 = 863.These 863 units of sales mix each contain 5 units of product,so the correct answer would be 863 ´ 5 = 4,315 units of product,3,452 of Product A and 863 of Product